Saudi Arabia’s hospitality industry has made great strides. Today, the Kingdom boasts some of the world-class hotels that are of five-star deluxe or even above that can be classed seven-star properties that Riyadh and Jeddah have.
A majority of starred hotels are managed by international chains that have contributed to excellent management and increased business with their worldwide networks.
These are now widespread locally and Kingdomwide thanks to the ongoing economic boom.
Saudi Arabia is an absolute priority for the international hotel management chains during the current year, in light of its anticipated surge in tourism, industry leaders say.
The hotel sector is set to achieve the largest breakthroughs in the coming years, given their great knowledge of the market and the habits and traditions of the region, not to mention the international level of their professional expertise.
With its increasing number of the annual Haj and year-round Umrah pilgrims, some of the local, regional and international investors have been targeting or implementing hotel projects in Makkah and Madinah.
A regional group from the UAE said that it was studying offers for the management of hotels in the two holy cities and was looking for new opportunities in other big cities such as Riyadh, Dammam and Alkhobar, aside from Jeddah.
Rotana, which is based in the UAE, currently runs 25 hotels with 5,615 rooms in Lebanon, Egypt, Jordan, Syria, Sudan and the Gulf states, and it will operate 28 hotels now in development, bringing the 2010 number to 53 hotels with about 16,000 rooms.
Regarding the entrance into the Iraqi market at the present time, Rotana’s spokesman indicated that there are negotiations with investors for the management of hotels in Irbil and Sulaymaniyah in northern Iraq as a first stage, stressing that political and security problems affect the tourism and hotel sector more than other economic sectors.
“We must deal with these problems as a part of life, and there are practically no regions in the world free of problems,” he added.
Al-Zeer, another such regional enterprise, said that it expected a boom in the hotel sector in the region exceeding the estimates announced recently by international companies, which expected the establishment of 50,000 rooms in the region by 2010, pointing out that the plan of the government of Dubai alone requires lifting the Principality’s capacity from about 40,000 rooms now to 100,000.
This means that Dubai alone will add about 60,000 rooms to the regional capacity
In spite of expectations that the large increase in the number of hotels in the region will lead to a corrective wave, he said that any correction in the sector will only take place after about four years, in light of the unprecedented boom and the opening of many large markets such as Saudi Arabia.
“In case the correction happens, it won’t be more than a simple easing closer to stability rather than a decline, rejecting the comparisons with shares, which he described as ‘paper’ -- unlike hotels, which are real and concrete investments,” he said.
He also denied expectations of low hotel room prices, or a hotel price war with the entry of new hotels to the market, stressing that the decisive factor in this matter is supply and demand, and that demand in the region is much larger than current supply and is expected to remain so during the next few years.
Hotel occupancy in the Kingdom is currently estimated from 60 to 75 percent, while in the UAE it ranges up to 95 percent.
“A correction will draw it down to 90 or 85 percent, still higher than the international average,” he added.
